Expensive stocks often command premium valuations because the market thinks their business models are exceptional. However, the downside is that high expectations are already baked into their prices, leaving little room for error if they stumble even slightly.

Finding the right balance between price and quality can challenge even the most skilled investors. Luckily for you, we started StockStory to help you identify the real opportunities. That said, here is one high-flying stock with strong fundamentals and two with big downside risk.

Two High-Flying Stocks to Sell:

Zumiez (ZUMZ)

Forward P/E Ratio: 30.1x

With store associates called “Zumiez Stash Members”, Zumiez (NASDAQ: ZUMZ) is a specialty retailer of street and skate apparel, footwear, and accessories.

Why Do We Pass on ZUMZ?

1. Store closures demonstrate a defensive approach to eliminating underperforming locations
2. Historical operating margin losses point to an inefficient cost structure
3. Earnings per share have contracted by 39.7% annually over the last three years, a headwind for returns as stock prices often echo long-term EPS performance

Zumiez’s stock price of $30.34 implies a valuation ratio of 30.1x forward P/E. To fully understand why you should be careful with ZUMZ, check out our full research report (it’s free for active Edge members).

Freshpet (FRPT)

Forward P/E Ratio: 42.7x

Standing out from typical processed pet foods, Freshpet (NASDAQ: FRPT) is a pet food company whose product portfolio includes natural meals and treats for dogs and cats.

Why Does FRPT Fall Short?

1. Modest revenue base of $1.08 billion gives it less fixed cost leverage and fewer distribution channels than larger companies
2. Cash-burning history makes us doubt the long-term viability of its business model
3. Below-average returns on capital indicate management struggled to find compelling investment opportunities

Freshpet is trading at $62.36 per share, or 42.7x forward P/E. Dive into our free research report to see why there are better opportunities than FRPT.

One High-Flying Stock to Buy:

Reddit (RDDT)

Forward EV/EBITDA Ratio: 41.1x

Founded in 2005 by two University of Virginia roommates, Reddit (NYSE: RDDT) facilitates user-generated content across niche communities (called subreddits) that discuss anything from stocks to dating and memes.

Why Is RDDT a Good Business?

1. Domestic Daily Active Visitors have grown by 32.3% annually, allowing for more profitable cross-selling opportunities if it can build complementary products and features
2. Earnings per share have massively outperformed its peers over the last three years, increasing by 40.3% annually
3. Free cash flow margin increased by 41.8 percentage points over the last few years, giving the company more capital to invest or return to shareholders

At $232.85 per share, Reddit trades at 41.1x forward EV/EBITDA. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free for active Edge members .

Stocks We Like Even More

If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.

Don’t wait for the next volatility shock. Check out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today

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